Why Microsoft is Banking on Interactive TV Ads

Microsoft’s Xbox Live team made a splash on Monday at Cannes Lions International Festival with the launch of NUads (or natural user-interface ads), an interactive ad product designed specifically to be used with Kinect, the company’s wildly successful gaming platfrom that allows people to play video games using gestures and their own voice rather than a controller. With NUads, Microsoft sees an immediate opportunity to make Xbox Live that much more attractive to brands, which will be able to have consumers virtually touch their products or simply use voice commands to find store locations and the like. But long term, NUads could make all TV ads — and maybe TV shows — interactive. Mark Kroese, gm of the Xbox Advertising Business Group, spoke to Digiday about the vision.
Our first thought when NUads were announced was that Microsoft was about to start putting a lot more ads into video games with Kinect. While product placement has been around in video games for a long time, we’ve seen the dynamic-game ads space struggle. Microsoft tried a lot of this with Massive [which was eventually shut down].
This is really about a completely different subject. This is about naturally interacting with video content. That is the problem we are really trying to solve here. This has nothing to do with dynamic in-game ads. It’s about how advertisers can run a 30-second spot and make it interactive, or as they are surfing around the Xbox Live dashboard, we can create an interactive ad opportunity where a person uses gestures to touch an ad or use their own voice to deliver commands. The number of places an ad can run is nearly infinite — in our dashboard or within content. This is about TV. Now, these ads can happen in-game, but that is not really where we are going.
It sounds like you have some pretty grand ambitions.
If you think about the TV experience today, it’s pretty passive. It’s mostly linear. Yet today the Web experience is highly interactive, and the consumer has an expectation of interactivity. The problem today is that with interactive TV, nobody really interacts with the TV. They use their phone or a tablet. This puts the focus back on TV. We think Kinect and NUads will do for TV what touch screens did for the phone.
Typically, when it comes to interactive video ads, the first thing you hear from agencies is, “Yeah, but the client spent $500,000 on their TV spot, and they’re not going to spend money to create an original interactive video spot for the Web or other platforms.” How do you answer that concern with NUads?
All an agency or advertiser has to do is include a call to action in their 30-second spot. They have no labor. They simply use our platform. This takes the work out of their hands.
Putting advertising aside, Xbox LIve is a major content consumption hub, whether it’s Hulu, Netflix or download to own TV shows and movies. Could content creators potentially find a way to use NUads or Kinect’s technology?
That’s tricky to answer. We are talking about what is possible, and we have a business development team looking at this. So this does not imply any specific deals. But speaking very hypothetically: so you’re watching American Idol, we want the audience to vote, you’re sitting there with your feet up on the couch and you can give a thumbs up to a singer using your hand with the same Kinect technology. If you’re a content company, we think this makes Microsoft a great partner.
Is there a way that NUads could be used to improve the display ad experience?
There is no Web browser on Xbox Live. We think one of the problems with Internet TV is that it’s trying to be a full Web browser on TV, and we don’t think people want that. NUads sort of bridge that gap — mixing the qualities of a non-interactive TV with a very interactive browser. Xbox is a global TV network with 35 million users. And it’s the only TV network in the world where you actually sign in. You always have my email address when I use Xbox Live. So you are going to continue to see new partnerships emerge.

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